Our client was hoping to secure the property finance to purchase a semi-commercial property from a family member. To find out how we secured our client the finance despite a lender’s hesitation, read the full case study.
At a glance:
- Semi-commercial property purchase from a family member
- Portfolio landlord with properties held in a Limited Company structure
- Commercial unit income accounts for 67% of the £90,000+ property rental income
The case:
Our client came to us wanting to purchase a semi-commercial property from her father, which he had recently purchased in cash. As she already owned a portfolio of five residential property investments, she had more than the minimum experience most lenders would look for on a mixed-use mortgage application.
Located in London, the residential element of the property benefitted from significant tenant demand, and a well-recognised high street company rented the commercial unit. Furthermore, the client’s father had recently re-negotiated the lease with the commercial tenant, securing a significant increase in the annual rent. This semi-commercial property would be a profitable addition to our client’s growing investment property portfolio!
Our client had a 27% gifted deposit from her father. Due to her experience and background finances, we were confident that accessing the right property finance would be straightforward.
The challenge:
The sole challenge we faced with this case came down to property ownership. As our client was the current owner's daughter, the lender required her father to own the property for six months before we could apply for a commercial mortgage. Consequently, we were only allowed to submit the mortgage application five months after the client’s father had purchased the property.
Despite these delays, we took the time to advise our client on what the lender would look for on their mortgage application. This meant we could arrange all the documentation in advance, allowing for a seamless application process once the five-month period had ended.
Given our understanding of the commercial mortgage market, we secured a highly competitive product for our client at a high loan-to-value. Here are the details:
Property value: £1,200,000
Loan amount: £847,000
LTV: 73%
Rate
Term: 20 years
Monthly mortgage payment: £5,490
Lender arrangement fee: 2% (£16,940)
Monthly rental income: £7,608
Gross yield: 7.6% per annum
Limited Company application.
*Rate as at March 2024.
